South Korea dumps Boeing fighter jet tender, Lockheed soars back

Tue Sep 24, 2013 6:43am EDT
 
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By Joyce Lee and Ju-min Park

SEOUL (Reuters) - South Korea's government bowed to public pressure on Tuesday and voted down a bid by Boeing (BA.N: Quote) to supply 60 warplanes, saying it would restart the multi-billion tender process to get a more advanced fighter.

Lockheed Martin's (LMT.N: Quote) F-35A, previously considered too expensive, has shot to the front of the line in the race for the contract after the defense ministry singled out a fifth-generation fighter as the preferred option.

The fifth generation F-35A, complete with its hi-tech stealth capability, has already been ordered by seven countries, including Japan and Israel.

Boeing's F-15 Silent Eagle had been in the box seat to win the 8.3 trillion won ($7.7 billion) tender - as the only bid to fall within budget - but former military top brass and even the ruling party's lawmakers had criticized the plane as it lacked crucial stealth capabilities.

"Our air force thinks that we need combat capabilities in response to the latest trend of aerospace technology development centered around the fifth generation fighter jets and to provocations from North Korea," defense ministry spokesman Kim Min-seok told reporters.

A third bid by the Eurofighter consortium's Typhoon was also ruled out for going over the finance ministry's budget. Under South Korean law, only bids under budget are eligible to win defense contracts.

A deal with Boeing or Lockheed Martin was seen as the most likely by experts because of South Korea's close military alliance with the United States against the belligerent North.

The South Korean government and air force will map out a fresh tender process and consider a new budget. The defense ministry said it could take around one year to complete the new tender round.   Continued...

 
The Boeing logo is seen at their headquarters in Chicago, April 24, 2013. REUTERS/Jim Young